Medivation (MDVN) Stock Soars on Speculation, Company Says Not for Sale

Shares of Medivation Inc. (MDVN) were trading up +5.45 or +14.58 percent to $42.84 per share in Thursday’s pre-market. The stock is up after news broke yesterday after the close that the company is talking with several investment bankers to defend itself after several potential buyers expressed interest in acquiring Medivation. Medivation stock closed at $37.39 per share, down -1.36 or -3.51 percent in Wednesday’s regular trading session.

Stock Analysis

San Francisco, California based Medivation was founded in 2004 from the acquisition of Medivation Neurology Inc. The biopharmaceutical company specializes in developing new therapies to treat serious illnesses which have limited treatment options.

Medivation is currently developing pidilizumab, an antibody that employs the patient’s immune system to attack tumors such as multiple myeloma and hematologic cancer.

In August of 2012, Medivation and Japanese pharmaceutical company, Astellas, were approved for the drug XTANDI (enzalutamide), an androgen receptor inhibitor, which had been shown to inhibit androgen binding to androgen receptors and interaction with DNA. XTANDI was approved for the treatment of metastatic castration resistant prostate cancer, and is the company’s only approved product.

According to sources which asked not to be named, due to the private nature of the deliberations, the company was approached by another large company that some speculated was the French pharmaceutical company, Sanofi S.A. Sanofi has been looking to acquire another company to increase its treatments of rare diseases. Nevertheless, whether Sanofi will pursue an acquisition of Medivation is still unclear. Representatives of both companies declined to comment on the matter.

Medivation has reportedly been working with investment banker JP Morgan Chase & Co. (JPM) to address interest from companies with the purpose of a potential acquisition. Other possible suitors besides Sanofi, include Swiss pharmaceutical company, Roche Holding AG and UK based AstraZeneca Plc.

Medivation has recently been under pressure by U.S. politicians that have criticized the company’s high price for its XTANDI treatment for prostate cancer. The treatment costs U.S. residents $129,000 a year, which is four times the price of the treatment in Canada and triple the cost in Sweden and Japan.

In a letter to the National Institutes of Health or NIH, signed by 12 U.S. congressional representatives, including the signatures of Senator Elizabeth Warren, Representative Elijah Cummings and presidential candidate Bernie Sanders, asked the regulating agency to lower the price of XTANDI. The letter stated that, “We do not think that charging U.S. residents more than anyone else in the world meets the obligation to make the invention available to U.S. residents on reasonable terms”.

The letter also stated that because the drug was developed at a U.S. university with grants funded with U.S. taxpayer money, the federal government has the right to revoke the patent on the drug if it finds that the terms are unreasonable.

Medivation stock is trading significantly higher in this morning’s premarket. The stock has been hit especially hard in the last year, falling over 40 percent since trading over $67.00 per share in May of 2015. Goldman Sachs gave Medivation stock a “neutral” rating after the close yesterday. The analyst gave a price target of $47.82 for the stock.

Removing the designation will free up capital and ease government oversight.

Published on Mar 31, 2016

By Jay Hawk

Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.